Unifund Assurance Company v. Vladimir Danilov, 2009 ONFSCDRS 134

The Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2009 ONFSCDRS 134

Appeal P09-00023

OFFICE OF THE DIRECTOR OF ARBITRATIONS

UNIFUND ASSURANCE COMPANY Appellant

and

VLADIMIR DANILOV Respondent

and

ECONOMICAL MUTUAL INSURANCE COMPANY and the INSURANCE BUREAU OF CANADA Intervenors

BEFORE: Delegate Lawrence Blackman

REPRESENTATIVES: Mr. Daniel Strigberger for the Appellant, Unifund Assurance Company Mr. Alon Rooz for the Respondent, Mr. Vladimir Danilov Ms. Nathalie V. Rosenthal for the requested intervenor, Economical Mutual Insurance Company Ms. Philippa G. Samworth for the requested intervenor, the Insurance Bureau of Canada

HEARING DATE: By written submissions to be received by September 15, 2009

APPEAL ORDER

Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

1. This appeal from a preliminary order is accepted.

2. The request for a stay of the Arbitrator’s June 15, 2009 Order is presently declined.

3. Economical Mutual Insurance Company is permitted, on terms, to intervene and to make submissions on issues of law arising in this appeal.

4. The Insurance Bureau of Canada is permitted, on terms, to intervene and to make submissions on the issue of law as restricted herein.

5. The Appellant has thirty days from the date of this decision to serve on the Respondent and the Intervenors and file (with a Statement of Service) with the Commission its written submissions. The Respondent and the Intervenors have twenty days from receipt of the Appellant’s written submissions to serve and file (with a Statement of Service) their respective written submissions. The parties and the intervenors have ten further days to serve and file any reply.

6. The legal expenses of this preliminary decision are deferred to the final determination of this appeal, subject to any further or other order of an appellate officer.

October 6, 2009

Lawrence Blackman Director’s Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL AND BACKGROUND

The Respondent, Mr. Vladimir Danilov, was injured in a November 29, 2005 motor vehicle accident and applied to the Appellant, Unifund Assurance Company, for statutory accident benefits payable pursuant to the Schedule.¹ The Appellant denied payment on the ground there was no nexus between it and the Respondent.

On January 19, 2009, a preliminary issue hearing was held before Arbitrator Bujold (the “Arbitrator”) to determine whether the Appellant was the first insurer to receive a completed Application for Accident Benefits and, in accordance with section 2 of O. Reg. 283/95, was responsible for paying benefits to the Respondent. The Arbitrator’s June 15, 2009 decision answered this question in the affirmative.

The Arbitrator noted that Economical Mutual Insurance Company (“Economical”) insured the only other vehicle involved in the accident and, upon its request and on consent of both parties, was granted intervenor status in the arbitration.

The July 14, 2009 Notice of Appeal herein asked that this appeal be accepted as the effect of the order was final although the decision was designated as being on a preliminary issue. If the Appellant was successful on appeal, the Respondent would have no recourse against the Appellant for accident benefits. Further, as the Arbitrator’s Order disposed of the Respondent’s possible claims against Economical, it had the effect of finally deciding the issues in dispute between the two insurance companies as well as raising serious legal issues.

The Notice of Appeal also requested a stay of the Arbitration Order. The basis for the requested stay was solely that “the Order disposes of Danilov’s possible claims against Economical.”

The Respondent’s July 31, 2009 Response to Appeal, while requesting that the Appeal be dismissed with costs, did not oppose the Appellant’s request for leave to appeal an interim or preliminary order, nor did it oppose the Appellant’s request for a stay of the Arbitrator’s June 15, 2009 order.

Economical filed an August 6, 2009 Response to Appeal requesting that the Appeal be dismissed with costs and opposing the Appellant’s request for leave to appeal and a stay. By letter dated August 7, 2009, the Appellant agreed that Economical “should likely continue to be involved in the Appeal as intervenor,” but the latter did not have standing to object to the requests for leave to appeal or for a stay, as it was not a proper party to the original hearing or this appeal.

I provided Economical until August 27, 2009 to serve and file an Application for Intervention, including any submissions as to its status. The Appellant and the Respondent had until September 8, 2009 to serve and file their respective submissions regarding Economical’s status in addition to any reply to Economical’s objections to the requests for leave to appeal and a stay.

In the interim, the Insurance Bureau of Canada (“IBC”) filed an August 18, 2009 Application for Intervention, with supporting reasons for its requested intervention.

I provided the Appellant and the Respondent until September 8, 2009 to provide written submissions regarding the IBC’s requested intervention. Economical and the IBC were also given an opportunity to comment on the other’s requested intervention and until September 15, 2009 to serve and file any reply submissions regarding their respective applications.

The IBC argues that its Application for Intervention should be accepted because it meets the criteria set out by Director Sachs in Vo and Maplex General Insurance Company, (OIC P‑002777, March 11, 1994), and:

1. Representing a majority of automobile insurers in Ontario, the IBC had an immediate interest in the interpretation of section 2 of O. Reg. 283/95 and the application of the sufficient nexus test as same had implications for the cost of insurance for all policy holders and could have significant implications to insurers regarding responsibility for unanticipated risks.
2. The IBC “acts as a lobby, agent and special interest group for its members, participating actively in making proposals and submissions on provincial and federal legislation and regulation.” The IBC should have a fair opportunity to make representations regarding the potential impact on the insurance industry regarding their core business and ability to underwrite and price risks and the impact on insurance policy holders.
3. Citing several examples, the IBC had “a long history of being granted intervenor status in both court proceedings and arbitration proceedings where the issue may have an impact on the insurance industry as a whole.”
4. The IBC was “uniquely positioned to provide a whole industry perspective” and to provide valuable assistance, especially regarding the impact of a decision on similar statutory or policy language elsewhere in Canada and the effect on premiums.
5. The broad industry ramifications would be seen on insurers who, relying on their prior understanding of sufficient nexus in refusing an application for accident benefits, might now be barred from pursuing the correct insurer if the ninety-day limitation period in O. Reg. 283/95 had elapsed.
6. The IBC could put forward a “point of view distinct or different from those of the parties involved in the litigation.”
7. The IBC would not present argument as to the characterization of the evidence in this case but rather “make independent and unique submissions with respect to the implication and impact on the insurance industry” respecting the sufficient nexus test, specifically regarding policies, practices and costs.
8. The IBC would assist as a “friend of the court.” It was not interested in the outcome of this Appeal as between the Appellant and Respondent, but wished “to assist in ensuring that full argument and consideration is given as to the broader implications of a determination that a wider interpretation” of the sufficient nexus test may have and ensuring that the relevant provisions “are interpreted in a clear and comprehensive manner that will provide guidance to insurers and policy holders on a go forward basis.”
9. The IBC undertook to ensure that its submissions would not complicate or delay the proceedings to any significant extent.

Economical’s August 26, 2009 Application for Intervention requested that it retain its intervenor status obtained at arbitration for the following reasons:

1. It was rightfully granted such status for the preliminary issue hearing;
2. It actively participated in the preliminary issue hearing and is an interested participant in this appeal; and,
3. It believed that the parties did not object to it retaining its intervenor status for the purposes of the appeal.

Economical requested that it not be added as a party to this appeal, in part, as that might prejudice its right to defend any application for arbitration. Economical opposed the IBC’s Application for Intervenor status, its reasons including:

1. The IBC did not raise any new issue and its intervention did not in any substantive way advance the issues in this appeal;
2. As Economical and the Appellant were both members of the IBC, the IBC did not reflect a whole-industry perspective;
3. Economical and the Appellant would be able to address the issues of automobile owners and insurers;
4. The IBC’s unnecessary intervention would create additional cost and delay; and,
5. The IBC’s submissions related to issues of fact and should not be considered as appeals from the order of an arbitrator are limited to issues of law.

The Respondent submitted that the IBC should not be granted intervenor status because:

1. The cost of insurance for policy holders was not a relevant consideration when interpreting section 2 of O. Reg. 283/95 and the application of the sufficient nexus test. Such considerations were “the domain of legislatures,” not of adjudicators, especially as the arguments advanced by the IBC were speculative and not evidence based;
2. The IBC had disclosed no whole-industry perspective or special expertise that would provide such assistance or wider perspective to justify its inclusion; and,
3. The impact on the core business of IBC’s members was irrelevant and speculative.

The Appellant’s September 8, 2009 letter, copied to all present participants herein, stated that Economical no longer opposed the Appellant’s request for leave to appeal or for a stay. The Appellant consented to the IBC’s intervenor request and adopted and relied upon the IBC’s written submissions. The Appellant did not oppose Economical’s Application for Intervention, but maintained its position as to the latter’s lack of standing regarding procedural issues.

The IBC submitted that if its application for intervenor status was denied, then so should Economical’s, as the latter did not meet the criteria for intervention set out in Vo. The IBC argued that the only reason that Economical advanced for being an intervenor was its personal interest in the appeal, contrary to the decision in Wellington Insurance Company and Edgar, (OIC P-05441, February 6, 1996). Further, there was no evidence that Economical had special expertise or that they could advance a point of view distinct from that of the Appellant or the Respondent that would assist in determining this appeal.

There are four preliminary issues to be determined at this time, namely:

1. Should this appeal from a preliminary or interim order be accepted?
2. Should the Arbitrator’s June 15, 2009 order be stayed?
3. Should Economical be permitted to intervene to make submissions on issues of law arising in this appeal?
4. Should the IBC be permitted to intervene to make submissions on issues of law arising in this appeal?

Exercising my discretion under Rule 56.5 of the Dispute Resolution Practice Code (Fourth Edition, Updated – October 2003), I am deciding these preliminary issues on the basis of written submissions for the following reasons:

(a) I provided notice on August 17 and 28, 2009 of my intent to determine these preliminary issues on the basis of written submissions;

(b) a reasonable opportunity was given to the parties and to the requesting intervenors to provide written submissions and to reply to the written submissions of others; and,

(c) these are preliminary issues where the importance of expeditiousness and avoiding unnecessary costs outweigh the limited additional usefulness of oral submissions, especially given the overall helpfulness of the written submissions and the potential additional delay in endeavouring to find a mutually available time for all four counsel for oral submissions.

II. SHOULD THIS APPEAL FROM A PRELIMINARY OR INTERIM ORDER BE ACCEPTED?

Rule 50.2 of the Code states that “a party may not appeal a preliminary or interim order of an arbitrator until all of the issues in dispute in the arbitration have been finally decided, unless the Director orders otherwise.” Rule 51.2(c) of the Code provides that an appeal may be rejected if “it is from a preliminary or interim order that does not finally decide the issues in dispute.”

In Allstate Insurance Company of Canada and Torok, (FSCO P01-00021, May 29, 2001), Delegate Makepeace stated that the purpose of this Rule was “to facilitate the most cost-effective resolution of disputes by minimizing the time and money spent on procedural or collateral matters.” The exercise of discretion in applying this rule “should be broadly interpreted to produce the quickest, most just and least expensive resolution of the dispute.”

Although the Arbitrator’s decision is characterized as being on a preliminary issue, the decision is final in disposing of the issue as to which insurer the Respondent should look to for payment of statutory accident benefits. None of the parties or requesting intervenors now submit that this appeal should be rejected. I am persuaded that based on the nature of the issue in appeal and the circumstances herein, it would be most efficient in time and expense, as well as most productive in assisting resolution of this matter, to address this appeal at this juncture.

Accordingly, the appeal from a preliminary order is accepted.

III. SHOULD THE ARBITRATOR’S JUNE 15, 2009 ORDER BE STAYED?

Subsection 283(6) of the Insurance Act provides that an appeal does not stay an arbitrator's order unless decided otherwise. As stated in Guardian Insurance Company of Canada and Armstrong, (FSCO P00-00037, July 20, 2000), a stay “is the exception rather than the rule.” In Canadian Home Assurance Company and Scavuzzo, (OIC P-000626, May 18, 1992), the following criteria were adopted as to whether to grant a stay:

1. the bona fides of the appeal;
2. the substance of the grounds for appeal; and,
3. the hardship to the respective parties if the stay is granted or refused.

In this case, there is no issue as to the bona fides or the substance of the grounds for the appeal.

In Chen and Kingsway General Insurance Company, (FSCO A97-000931, November 10, 1998), I stated that “[t]he purpose of O. Reg. 283/95 includes ensuring that a claimant will receive benefits pending the resolution of a priority dispute.” If a stay is granted in this case, it is unclear who is presently responsible for responding to any claim for benefits by the Respondent.

Pending clarification (consistent with the intent of O. Reg. 283/95 as to a seamless receipt of statutory accident benefits while any dispute between insurers is being resolved) as to who is responsible for the payment of accident benefits during this appeal, the request for a stay is presently declined.

IV. SHOULD ECONOMICAL BE PERMITTED TO INTERVENE TO MAKE SUBMISSIONS ON ISSUES OF LAW ARISING IN THIS APPEAL?

Subsection 283(8) of the Insurance Act states that the “Director may permit persons who are not parties to the appeal to make submissions on issues of law arising in an appeal.” My appointment as Director’s Delegate pursuant to subsection 6(4) of the Insurance Act authorizes me to hold hearings on behalf of the Director and to exercise the powers and perform the duties of the Director relating to such duties.

The IBC points out that while Rule 59 of the Code addresses interventions, it provides no criteria that are specifically required for an intervention application to be successful.

Rule 13.02 of the Rules of Civil Procedure addresses leave to intervene as friend of the court. Vo starts from this vantage point, looking at the request for intervention through the prism of friend of the court or public interest group. In this regard, Vo sets out the following criteria for when an Application for Intervention should be favourably considered:

(1) the arguments or submissions to be made by the intervenor relate directly to an issue of law which has a broader implication than the immediate one affecting the parties to the appeal;

(2) the nature of the intervenor, whether an individual, organization or corporation, including their special expertise, giving a wider perspective on the issue;

(3) the intervenor’s ability to put forward or advance a point of view distinct or different from those of the parties; and,

(4) the Director believes the ultimate outcome of the case may have an implication beyond the immediate interests of the parties.

Rule 13.01 of the Rules of Civil Procedure provides a different category of intervention, namely adding an intervenor as a party, where, amongst other things, the person seeking leave to intervene has an interest in the subject matter of the proceeding or may be adversely affected by a judgment in the proceeding.

Subsection 283(8) of the Insurance Act allows persons who are not parties to the appeal to make submissions on issues of law arising in an appeal. Although Vo states that the statutory scheme “is more closely equated to the ‘friend of the court’ concept,” subsection 283(8) does not restrict intervention solely to friends of the court nor is intervention limited solely for the purpose of rendering assistance to the tribunal.

Edgar involved a private individual with strong views on an issue, who was refused intervenor status. The requesting intervenor had no apparent direct interest in the specific dispute between the parties and would not be directly adversely affected by the result.

In this case, I am persuaded that Economical, whom the Appellant implicitly argues should be responsible for payment of the Respondent’s accident benefits claims, does have a direct interest in the subject matter of this proceeding and may be directly adversely affected by this appeal. Both the Appellant and the Respondent consent to Economical intervening at arbitration. Neither opposes its continued intervention, although the Appellant requests terms.

To the extent, if any, that Vo restricts intervention under subsection 283(8) of the Insurance Act in such limited further circumstances, I would respectfully disagree noting, as stated by Delegate Makepeace in Coachman Insurance Company and Hejnowicz, (FSCO P05-00024, August 3, 2006) and by Delegate Evans in Aboufarah and Allstate Insurance Company of Canada,(FSCO P03-00038, February 1, 2006), that Director’s Delegates are not bound by other appeal decisions, including those of the Director.

Subsections 282(11) and (11.2) of the Insurance Act, by virtue of subsection 283(7), provide that a Director (and, by virtue of subsection 6(4), his or her delegate), may make an expense award against the insured person, the insurer, or a person representing an insured person or an insurer.

I allow Economical’s request for intervention in this appeal, on the following terms:

1. Economical will be bound by the decision of this appeal;
2. Economical, pursuant to subsections 282(11) and (11.2) of the Insurance Act, as at the very least “an” insurer and possibly “the” insurer, will have the right to claim and the potential liability to be responsible for legal expenses; and,
3. Economical will have an equal right to make submissions on questions of substantive and procedural law.

V. SHOULD THE IBC BE PERMITTED TO INTERVENE TO MAKE SUBMISSIONS ON ISSUES OF LAW ARISING IN THIS APPEAL?

The IBC’s application for intervention is made on the basis of a friend of the court.

Rule 13.02 of the Rules of Civil Procedure provides that a person may, with leave, and without becoming a party to the proceeding, intervene as a friend of the court “for the purpose of rendering assistance to the court by way of argument.” The latter, as noted, was the basis upon which Director Sachs in Vo set out a non-exhaustive set of criteria.

The following concerns cause me to question allowing the intervention of the IBC in this case:

1. While the IBC submits that it presents a “whole-industry” perspective, both insurers herein belong to the IBC. The evidence before me is that of the IBC’s constituent members, its position on the legal issues in this appeal is supported by one specific member and is opposed by a second.
2. Rather than bringing a distinct or different point of view from those involved in this proceeding, the Appellant adopts and relies upon the IBC’s submissions.
3. Although the IBC presents itself as a friend of the court, it concedes that it is a lobby and special interest group and that it has an immediate interest in the result in this case, specifically, perceived additional cost and an adverse effect on insurers’ ability to underwrite policies.
4. I am not persuaded, nor did the IBC argue, that the positions it advanced on the questions of law herein were less than fully and competently presented by the Appellant. Rather, the requested intervention had the prima facie appearance of stacking legal representation.
5. The intervention of the IBC would, and already has, led to additional cost and delay, that would not necessarily be compensated for in legal expenses.
6. Given the apparent universality (when one includes the Motor Vehicle Accident Claims Fund) of access to first-party automobile insurance benefits, this case would appear to be about which insurer should pay, not what is ultimately to be paid to this specific Respondent. The question of law, presently, appears to be whether the concept of “sufficient nexus” extends or does not extend to a very precise set of facts. The facts in one case may require one insurer to pay. In another case, with a consistent application of the law, the facts may not require the same insurer to pay. It is presently unclear as to why, overall, there would be any greater increase in the amounts paid out by insurers as a whole.
7. In this quicker, cheaper and less complicated system of dispute resolution, intervention is the exception, not the rule. I have some difficulty in distinguishing this case from one, for example, where the application of “substantial inability” under section 4 of the Schedule or “reasonable and necessary” under section 14 might equally be in issue and that might have cost, time and/or compliance ramifications for the IBC’s members.

On the other hand, Driedger on the Construction of Statutes, Third Edition, Butterworths (Toronto, 1994), states at page 131, “[t]here is only one rule in modern interpretation, namely, courts are obliged to determine the meaning of legislation in its total context, having regard to the purpose of the legislation, the consequences of proposed interpretations, the presumptions and special rules of interpretation, as well as admissible external aids” [emphasis added].

In Chen, as noted, I stated that “[t]he purpose of O. Reg. 283/95 includes ensuring that a claimant will receive benefits pending the resolution of a priority dispute.” A further purpose of this scheme of automobile insurance is the expeditious payment of first-party benefits.

The IBC submits that it is uniquely positioned to provide a whole-industry perspective and valuable assistance, in part, on the impact on insurance policy holders. Neither of the parties nor Economical provided submissions in this regard. I am persuaded that this appeal may, to use the words of Vo, have a broader implication beyond the immediate interests of the parties and that the IBC can, hopefully, give a helpful, wider perspective on this specific aspect of the appeal.

Accordingly, I am allowing the intervention of the IBC restricted to providing submissions as to how the consequences of proposed interpretations regarding O. Reg. 283/95 and the sufficient nexus test affect the legislative purpose of (1) the most expeditious and cost effective etermination of a claimant’s entitlement to and the quantum of statutory accident benefits, and (2) that the determination of which insurer is responsible for payment does not, by itself, prejudice or adversely affect claimants from a seamless receipt of statutory accident benefits to which they are entitled under the Schedule.

Using the time lines of Rule 54.1 of the Code, the Appellant will have thirty days from the date of this decision to serve on the Respondent and on the Intervenors and file (with a Statement of Service) with the Commission its written submissions. The Respondent and the Intervenors will then have twenty days from receipt of the Appellant’s written submissions to serve and file (with a Statement of Service) their respective written submissions. The parties and the intervenors will have ten further days to serve and file any reply. An oral appeal hearing date will then be set.

VI. EXPENSES

The legal expenses of this interim decision are deferred to the final determination of this appeal, subject to any further or other order of an appellate officer. I leave to further argument, if raised, the issue of the potential for legal costs by or against the IBC.

October 6, 2009

Lawrence Blackman Director’s Delegate

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.